May 23, 2000 5:00 AM PDT

Alpha Processor expands from chips to Linux-based systems

Alpha Processor, a company founded by Compaq Computer and Samsung to expand the market for high-performance Alpha chips, is rewriting its business model.

Currently a seller of Alpha chips and associated electronics, Alpha Processor this fall will begin selling special-purpose Linux-based computers designed to pump out streams of multimedia content over the Internet.

Compaq inherited the Alpha chip design when it acquired Digital Equipment in 1998, and Samsung began manufacturing the chip shortly thereafter. Compaq and Samsung expected Alpha Processor to expand the market for the chip, an effort that has met with only modest success.

Reflecting the expanded strategy to sell full-fledged computers, Alpha Processor chief technology officer Gerry Talbot took over as president today. Daeje Chin, a Samsung executive, had been president but will remain chief executive officer. In addition, the company has set up a new business unit, API Networks, under David Rich to focus on the new special-purpose computers.

"I would have to say this is an adjustment" to Alpha Processor's strategy, Talbot said in an interview. "This market segment isn't available to you with just raw chips and boards."

In two or three years, the new business will generate the same revenue as the current business selling Alpha processors and associated electronic components to Compaq and other computer makers, Talbot predicted.

The respected Alpha processors, which power Unix servers from Compaq and many smaller computer makers, have never achieved the popularity of Intel chips. A significant potential new market was shut off with the demise of the plan by Compaq and Microsoft to continue selling a version of Windows for Alpha chips.

Compaq uses Alpha chips in its new 32-processor "Wildfire" server. Though those systems won't be running Windows, Alpha Processor still sees good demand. The company has been selling Compaq chips for the Wildfire systems for six months.

"It's a good business selling CPUs to Compaq. They've got an enormous backlog for this stuff," Talbot said. "This year, it's going to end up being capacity-limited."

Alpha Processor's new CNET's Linux Centermachine will consist of a collection of smaller, two-processor Alpha computers, each running its own copy of Linux but the whole system acting essentially as a single large server, Talbot said. The machines will have from 16 to 30 two-processor systems, though the design will work for machines with hundreds, he said.

Network Appliance, Alpha Processor's second-biggest customer after Compaq, already sells an Alpha-based server designed to help distribute streaming media. And companies such as SGI, Cobalt Networks and Sun Microsystems also view streaming media as a lucrative market for their own server designs.

Alpha Processor's machines will be designed for heavier-duty jobs than Network Appliance's, Talbot said, adding that Alpha Processor wrote the extra software that shares the load across the collection of computers.

Though prices haven't been set yet, the streaming media systems probably will cost between $3,000 and $5,000 per processor, he said.

Currently, one of the biggest markets for Alpha chips is in "Beowulf" clusters, collections of computers often running Linux that collectively perform complex mathematical calculations such as weather simulations. Alpha Processor, Compaq and Linux seller Red Hat have entered partnerships to advance this particular market. However, the technical computing market is smaller than the mainstream business market, particularly with the advent of the Internet.

 

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